Autarkic policy and efficiency in the Spanish industrial sector. An estimate of domestic resource cost in 1958

Martínez Ruiz, Elena
(2003)
Autarkic policy and efficiency in the Spanish industrial sector. An estimate of domestic resource cost in 1958.
Economic History Working Papers,
77/03.
Department of Economic History, London School of Economics and Political Science, London, UK.

Abstract

The impact that the francoist autarkic economic policy had on the Spanish economy is assessed using the Domestic Resource Cost (DRC) as an indicator. This indicator compares the real opportunity cost of the primary factors used in the production of a certain good with its aggregated value at international prices. Since the DRC provides a ranking of sectors classified according their relative efficiency, it can be interpreted as an indicator of comparative advantage. Our results indicate that the inefficient allocation of productive factors induced by the interventionist economic policy resulted in a significant loss of efficiency for the economy, such that only 50 out of 125 industries, accounting for 39 percent of the Spanish industrial production, could be considered efficient. However, the paper also shows that the Spanish economy was in a good position to take advantage of the opportunities created by the 1959 reform, as the lion’s share of industrial production was on the verge of relative efficiency.